Electric car battery maker Ener1 filed for bankruptcy Thursday, three years after receiving a $118.5 million grant from the U.S. government.
There will be a lot of hand-wringing by conservatives, bemoaning the fact that Obama is wasting our tax money on a company that failed....and all that.
And there will be a lot of defense from the left trying to deflect the blame from Obama....and all that.
But the real problem is grants themselves, and it is equally true whether the grant comes from the government or from another entity. The truth is that some people are very good at writing grant applications while other people are very good at achieving the goal. Very few excel at applying and also doing the work required.
I have been personally involved in both sides, so I have some basis for my position. Some years ago I received the Wolf Aviation Fund prize, they give one each year for a promising new concept in aviation. It is a $10,000 award and I was proud. That's a lot of money. (As a side note, I opened a special bank account for the $10k and within a few days, before I had spent a penny, I got a statement from the bank showing a balance of $9993. OK, it was just seven bucks, but it sure put a bad taste in my mouth that my five digits had been reduced to four. I immediately closed all business with that bank and went across the street with my money. But that's another topic.)
I'd put months of work into that proposal and had the best of intentions to carry out the work. I used the money to generate more money (investors) and formed a company and hired people and applied blood, sweat, and tears and in the end the idea was a failure. I was a failure. I had spent investors' money to no avail. Believe me, it was a real bummer. Some people would read my failure as a scam where I took the money and failed. Some will read the headline here and assume the same about Obama. The reality isn't so simple.
Later my company received a grant from DOT that came to just over $500,000, for devising a way for tractor-trailers to autonomously and constantly weigh themselves with no equipment whatever on the trailer. It is not an easy problem with different tractors connecting with different trailers with different load parameters, et cetera. In two years we succeeded and received a patent. And someday, maybe, if the DOT changes their regulations, there will be a mass market. But there is not a dollar to be made yet.
Rather than giving grants, another option is to offer a prize to the first who can accomplish the objective. Charles Lindbergh claimed the Orteig Prize of $25,000 for being the first to fly non-stop from New York to Paris. In 1959, Henry Kremer offered a prize of £50,000 for the first human-powered airplane to fly a specified course. There were many who tried, each advancing the state of the art. Eventually Paul MacCready won the prize in the Gossamer Condor. The second Kremer prize of £100,000 was won on June 12, 1979, again by Paul MacCready, when Bryan Allen flew MacCready's Gossamer Albatross from England to France.
The $10,000,000 "Ansari X Prize" was offered in 2004 for the first non-government suborbital flight carrying passengers and was won later that same year by Burt Rutan and Paul Allen, using the experimental spaceplane SpaceShipOne. Can you imagine NASA accomplishing anything within one year?
$10 million was awarded to the winner, but more than $100 million was invested in new technologies in pursuit of the prize. Plus untold millions invested by the others who did not win. Their work contributes to our store of knowledge too.
And that's the point, winners receive prizes after they prove their merit. Skilled "grant writers" (they actually write proposals) receive grant money up front. It's a matter of sequence.
So don't blame Obama for the battery company biting the dust, blame Obama for paying the money up front rather than offering a prize to someone who could do the job. And blame Bush and Clinton and that other Bush and Reagan and Carter and Ford and Nixon..............